E*Trade Financial (NASDAQ:ETFC) shares surged higher in late trading today rallying 9% to $1.69, after speculation grew that the online brokerage firm may be a takeover target.

Earlier in the day, the company reported its lackluster October trading activity for its customers and also provided evidence that the company continued to reduce its bank related assets.

The speculation of a potential deal grew in intensity after Reuters reported that TD Ameritrade Holding Corp.’s (NASDAQ:AMTD) chief executive officer Fred Tomczyk said buying an online brokerage is the best use of the company’s cash and that he would consider a deal with E*Trade at the right price.

Analysts perceive that if there is any consolidation in the space, it will likely include E*Trade, as after the financial crisis the company was left with a significant burden on its bank holdings that left the online brokerage at a disadvantage versus its peers.